By Myrna M. Velasco
A preliminary deal had been inked by Petron Corporation on its intent to sell its 140-megawatt power plant to affiliate firm SMC Powergen Inc., one of the power generation investment corporate vehicles of the San Miguel group.
The parties signified their targeted merger and acquisition (M&A) transaction via a memorandum of understanding (MOU) that was signed recently.
Under the MOU, it was stipulated that SMC Global Power which is the parent firm of SMC Powergen, “will conduct a preliminary review of the power plant and its operations over a six-month period to determine the feasibility of a possible acquisition.”
The Petron-owned power facility has a rated capacity of 140 megawatts; and has been dedicatedly supplying the electricity needs of its 180,000 per stream day refinery in Limay, Bataan.
Petron currently operates the biggest refinery in the country that had been underpinning the operations of its distribution networks in the deregulated downstream oil industry.
In 2016, it was Petron that was given the authority to acquire the same power plant from SMC PowerGen – but this time, the targeted transaction will be a reverse of that.
On the intended new purchase deal, the parties have not given any hints yet on the negotiation terms, except for the six-month review that acquiring SMC Powergen will be pursuing.
To recall, Petron decided to set up its own power generation facility in the past to ensure that its refinery would not be affected by portended power crisis in the Luzon grid.
The power generating facility was completed around 2013; and it was in 2010-2011 when Luzon grid power supply had been teetering at a crisis situation.
And since the power plant’s capacity had been bigger than the electricity demand of the Petron refinery, the oil firm also opted to sell part of its capacity to the grid and had at times traded it via the Wholesale Electricity Spot Market.
Company executives have sounded off then that electricity sales to the grid had been helping the oil company shore up its revenue stream.
As designed, the plant has four generating units for total installed capacity of 140 megawatts; and could also produce 800 metric tons of steam per hour.
Earlier plans also called for the expansion of the power facility by up to 216MW capacity – with demand expected going up on planned upgrade of the Petron refinery.